Accounting Problem? Help! Anyone who can answer is a genius!?

Question

Can anyone answer this? None of my friends could when I asked for help! Please! Thank you. Anyone who can answer this is no doubt a genius in my opinion! :)

ABC Company has an extensive repair facility for engines. Budgeted variable overhead at a level of 8000 standard monthly direct labor-hours was $64,000; budgeted total overhead at 10,000 standard direct labor-hours was $197,600. The standard cost allocated to repair output included a total overhead rate of 120% of standard direct labor costs. Total overhead incurred for october was $249,000. Direct labor costs incurred were $202,440. The direct labor price variance was $9640 unfavorable. The direct labor flexible-budget variance was $14,440 unfavorable. The standard labor price was $16 per hour. The production-volume variance was $14,000 favorable.

what is the spending, efficiency and production-volume variances for overhead? also, compute the denominator level.

Answer 1

The idea is to get the actual quantity (direct labour hour) for the month. You can get that by using the DLC actual cost of 202,440 - The direct labor flexible-budget variance was $14,440 unfavorable = 188,000 divide by The standard labor price was $16 per hour. You get 11,750 DLH.

Your data have budgeted VMO & the rate is 64,000/ 8,000 = 8/DLH. You also have the total budgeted MO data, combining it you know that the FMO @10,000 DLH is 117,600.

Now, remember that The standard cost allocated to repair output included a total overhead rate of 120% of standard direct labor costs. The fact you only have 1 actual MO, meaning you can't tell how much portion is Fixed & how much is Variable, so you need to combined the variance analysis as well.

The budgeted std cost MO at actual activity of 11,750 = FMO of 117,600 + (11,750 x 120% x 8) = 230,400

Compare it with actual 249,000, you get the spending var of 18,600 UF. With The production-volume variance was $14,000 favorable, the budgeted MO would then be 230,400 + 14,000 = 244,400.

Total MO Variance = 4,600 UF